This is pretty basic economics but apparently it needs spelling out…
Sponsorship deals go to the highest bidder. If the highest bidder is excluded from the process then the organisation that is looking for a sponsor will have to take the next highest bid, which will be lower.
The upshot of banning a whole industry from sponsoring football clubs, for example, is therefore that the football clubs will make less money from sponsorship.
With a week to go before the English Premier League resumes, that lesson is now being learned.
Heading into this summer, almost half of the teams in the Premier League found themselves confronting the same commercial headache.
Back in April 2023, all 20 member clubs collectively agreed to end front‑of‑shirt sponsorship deals with gambling firms from summer 2026.
… For years, gambling companies have underpinned the commercial reality of the league’s middle and lower tier, offering inflated sponsorship fees that other industries simply could not, or would not, match.
You can see where this is going…
“Collectively, the gap these clubs had to plug, as we worked it out, was around £80m,” said Mike Haywood, vice‑president at Octagon, one of the world’s largest sports sponsorship consultation firms. “There were between eight and 12 clubs that needed to plug that gap. Some of those clubs are still looking for long‑term solutions, while some of them are waiting for the market to heat up.”
Many football fans will find it hard to sympathise with the big beasts of the Premier League. I’m sure they will be alright in the end. But it is worth remembering that the anti-gambling lobby insists that companies are queuing up to sponsor teams and that football clubs can make the same amount of money being sponsored by more wholesome companies. You hear the same kind of thing from those who want to ban sponsorships and advertising of alcohol brands or so-called ‘junk food’ companies.
It is nonsense. When tobacco sponsorship was banned in snooker, for example, the number of tournaments dwindled to a handful and the amount of money in the game collapsed. It had to settle for the second best bids, which these days are often from gambling companies. If gambling sponsorship is banned, it will have to settle for the third best bid. And so on. Banning the top sponsors inevitably leads to less revenue.
The Premier League ban is “voluntary” because the people who run it thought that they were being clever trying to appease the government of a command capitalist economy.
“There is an element of tokenism with all of this,” explained football finance expert and author of The Price of Football, Kieran Maguire. “When the Premier League were lobbying against the Independent Football Regulator this was seen as something they could do to show that they could self‑govern appropriately. Now, in their eyes, they have the worst of both worlds with the IFR and no gambling income.”
Appeasement rarely works in the short term and never works in the long term.
Maybe they’ll increase ticket prices to make up the shortfall.
Cross-posted from the Snowdon Substack
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